ITXPO: BT, AT&T won't merge, says Bonfield

British Telecommunications has no plans to merge with or be acquired by its partner AT&T within the next 12 to 18 months, said BT's president and chief executive officer in a keynote interview here yesterday at Gartner Group's European Symposium/ITxpo '99.

"We've got no plans to merge with AT&T," said Peter Bonfield, in response to a direct question posed by Gartner vice president and research fellow Ken McGee. The alliance between BT and AT&T provides primarily data services to multinational corporations, under the brand of Concert.

In September, the pair announced they would extend their alliance into global mobile services. Concert, officially relaunched at Telecom 99 in Geneva last month, was also approved by the US Federal Communications Commission in October.

The alliance, said Bonfield, includes only 10 percent of the assets of each company, "where we have the most synergies." Bonfield didn't rule out a closer alliance in the future -- if it was in the economic interest of shareholders.

During the interview, Bonfield outlined the way in which BT's business is shifting away from domestic and voice services toward data, the Internet, mobile and international business.

In its home market, BT is facing increasing pressure from competitors for the lucrative business and long-distance markets. With more than 400 competitors in the UK market, said Bonfield, "we continue to lose market share to them."

The company has therefore shifted its focus in its domestic market to take advantage of areas of growth -- Internet and mobile communications. In July, it acquired the remaining 40 percent of shares needed to give it full ownership of the BT Cellnet mobile carrier, paying Securicor 3.15 billion pounds ($US5 billion) cash for its stake.

It also expanded its relationship with Microsoft in October to develop and deploy technology and services that will give users access to corporate systems via handheld computers and mobile phones. The companies also are extending that endeavor to offer consumer services for handheld devices operating on the Windows CE operating system.

BT's mobile business is moving more toward data in other ways too, Bonfield said yesterday. The use of SMS (short message service) is booming. A year ago, BT Cellnet only had 80,000 messages per month on its network. Today it handles 22 million per month, Bonfield said.

Even in the UK residential market, BT is seeing a big shift toward the Internet. Twenty-five percent of all of its residential minutes are for Internet use, Bonfield said. Next year, the carrier is upgrading 400 exchanges, serving 6.5 million people, to offer them ADSL (asymmetric digital subscriber line) for broadband Internet access. In the future, BT might very well be in the e-commerce business by taking a cut of transactions that happen over its network, Bonfield said.

The company reported growing revenue and profit in the first quarter of its new fiscal year, as revenue from mobile phones, high-speed data lines and the Internet have limited the negative effect of increased competition. Also, the company's European ventures have become profitable this year. BT reported revenue of almost 5 billion pounds ($US7.9 billion) and pretax profit of 772 million pounds in the first quarter, ended June 30.

The Gartner Group conference runs through Thursday here.

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